Collaborative effort leads Oklahoma to sunset wind tax credits early

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Dive Brief:

Oklahoma Gov. Mary Fallin (R) on Monday signed legislation to prematurely end a wind tax credit, sunsetting the incentives on July 1.

The state is third in the nation for total installed wind capacity, with nearly 7,000 MW of the carbon-free online.

The zero emissions credit for wind production is $0.005/kWh, and was scheduled to phase out in 2021. In 2014, the state's wind industry began working with Oklahoma leaders to end the credit early.

Dive Insight:

Oklahoma's wind rushing down the plains has been so successful that phasing out the state's tax credit has been collaborative rather than contentious. Jeffrey Clark, president of The Wind Coalition, said the incentives were "tremendously beneficial" but are no longer needed for the industry to succeed.

“The incentives have served their purpose well and have helped Oklahoma bring much-needed diversification to its economy," Clark said in a statement.

In Oklahoma, wind is competitive with other sources of generation even without subsidies. The most recent levelized cost of energy analyses from Lazard put the LCOE of land-based wind to be between $32/MWh and $62/MWh—lower than that of a combined cycle natural gas plant, which came in at between $48/MWh and $78/MWh.

“The zero emissions tax credit was key to the growth of wind energy in Oklahoma, and I’m grateful to the industry for their ambitious successes, as well as their willingness to work with the state to address our challenging budgetary circumstances," Fallin said in a signing statement.

Fallin's executive budget proposed in February called for the early phaseout of wind incentives, which were on track to cost state residents $40 million this year. Now wind accounts for more than a quarter of the state’s electricity generation mix, and helps keep Oklahoma's cost of electricity among the lowest in the nation.

Oklahoma is not the only state looking to recoup some monies that are directed towards renewable energy. Wyoming lawmakers last year rejected a proposal to increase the state's tax on wind production. Officials had been mulling raising the production tax from $1/MWh to $3/MWh. In 2015, the tax brought in $3.8 million. South Dakota also has a tax in place for wind farms 5 MW or larger.